FarmPolicy

August 31, 2014

Farm Bill; Budget; and, the Ag Economy- Wednesday

Farm Bill – Policy Issues

DTN Ag Policy Editor Chris Clayton reported yesterday (link requires subscription) that, “While direct payments are included in the farm-bill extension, producers shouldn’t hold their breath waiting for the check to show up this fall.

“Direct payments normally are sent out in the fall, which gives Congress several opportunities before then to step in and redirect USDA from issuing direct payments, which cost about $5 billion a year.

But barring action from lawmakers, USDA will plan to comply with the law and send out the checks, Agriculture Secretary Tom Vilsack said Tuesday.”

Mr. Clayton noted that, “‘Absent congressional action that says otherwise, we plan on doing what we’ve been doing for the last several years with respect to direct payments,’ Vilsack said in a phone interview…If Congress again opts for a new farm program rather than carry on with direct payments, it would also need to happen fast enough for USDA to draft rules to avoid being disruptive to producers.”

Yesterday’s DTN article explained that, “Sen. Charles Grassley, R-Iowa, a member of the Senate Agriculture Committee, told reporters in a conference call Tuesday that the farm bill could still get caught up in the sequester debate and eliminate or reduce the funds available for direct payments later this year. The running theory is that the farm bill offers a pot of money to be used for offsetting cuts in the upcoming sequester and debt-limit debate.

“Congress could also move fast enough to complete a farm bill, yet recent history would suggest it is unlikely Congress will complete a new five-year bill by Sept. 30.

“The status of the Average Crop Revenue Election program also remains unknown. ACRE was set to expire Sept. 30, 2012. The extension was silent over whether ACRE is extended.”

In a separate update yesterday at the DTN Ag Policy Blog, Chris Clayton reported that, “[Agriculture Secretary Tom Vilsack] has been alternately clarifying and building on comments he made last month at a speech in Washington in which he pointed to infighting and division within agriculture and rural America as hurting the ability to work on national initiatives for farmers and rural residents.

“‘I think we got people’s attention,’ Vilsack said Tuesday in a phone interview. ‘That’s what it was designed to do. There’s a difference between the relevance of rural America to the rest of the country and the political relevance of rural America.’”

The DTN update indicated that, “Rural America has never been more relevant in terms of providing food, water and energy to the rest of the country. Yet, Vilsack was also in the middle of pushing for a five-year farm bill that was not completed. The lack of movement on a farm bill essentially validated Vilsack’s message.

“‘Its political relevance is underscored by the fact the House leadership felt they could, without any repercussions, pull the plug on the work of the House and Senate Agriculture Committees.’”

Secretary Vilsack was also a guest on yesterday’s AgriTalk radio program with Mike Adams (audio replay of interview (MP3- 13:00), FarmPolicy.com transcript here),  where he also noted that, “We’re going to have to be aggressive to make sure that we get the message about the relevance and the importance of rural America to the rest of the country, so that we can get the kind of support in Congress and among congressional leaders that gets a five-year program done.

Rural America provides so much to the rest of the country, and is underappreciated. Not only does it provide food, but it’s responsible for most of the water that we consume, it provides most of the energy and fuel that we use to get ourselves to work, to do our work, and of course, as I’ve said on many occasions, it provides a disproportional number of the young people in our military, so it’s an important part of America.

“And it didn’t get its just due in 2012, and it needs to be a focal point for everyone in Congress and in the administration to encourage a new economic opportunity, a new vision, if you will, for rural America.”

Sec. Vilsack added that, “There’s a difference between the relevance of rural America and the political relevance of rural America, and people are failing to make that distinction. I want to make sure I explain it more succinctly. Rural America has never been more relevant to the rest of the country as a source of food, water, fuel, energy, etc.

“But its political reality is tied, in part, to the fact that there are fewer people, as a percentage of America, living in rural America than ever before. With fewer people, with population losses—more than half of our rural counties actually lost population—and when that happens and you have reapportionment and realignment of legislative districts and congressional districts, you have fewer and fewer people in Congress who understand the importance and significance of rural America.

“And the fact that leadership in the House felt that they could, without much pushback, pull the plug on the work of the Senate Ag Committee in the United States Senate and the House Ag Committee, and not get that five-year farm bill done, at a time when we could have provided additional savings towards the fiscal challenges that we face, is a wake-up call for all of rural America.”

During yesterday’s AgriTalk program, Sec. Vilsack also discussed the SNAP program, USDA budget issues, and also explained that: “Well, I think the lesson for the last two years has been the importance and significant role that crop insurance plays in maintaining some degree of stability in the countryside. Boy, I tell you, if we were back in the 1980s and had the kind of drought that we had this year, we know what would have happened. We would have lost a lot of our producers because they just simply wouldn’t have been able to make it financially. But because of crop insurance, the disruption was minimized.

“Now, if you’re a dairy producer or you’re a livestock producer, you’re still faced with some very difficult circumstances and situations. But hopefully, again, with a five- year bill, maybe a retroactive resumption of these disaster programs, we can provide some assistance and help. But without crop insurance, we would have been in a very, very tough situation. So I think the case has been made strongly the last two years for the importance of crop insurance as the linchpin to the safety net for producers.”

Meanwhile, Ken Anderson reported yesterday at Brownfield that, “In his much-analyzed December speech at a Farm Journal forum, Agriculture Secretary Tom Vilsack said agriculture needs to be more strategic about the fights that it picks—because, in his words, ‘those fights are often misinterpreted in some corners.’

“Vilsack cited, as an example, opposition from livestock groups to the so-called egg bill in Congress—legislation that would set federal standards for cages housing egg-laying hens.”

Yesterday’s update added that, “Vilsack tells Brownfield that kind of in-fighting is hurting rural America at a time when it badly needs to build alliances and expand opportunity.

“‘We shouldn’t discourage that kind of conversation because that creates the kinds of alliances and friendships and relationships that will allow us—eventually—to get enough votes in Congress to pass legislation that we need to make sure that we’ve got rural opportunity,’ Vilsack says.”

In other developments, House Ag. Committee Ranking Member Collin Peterson (D., Minn.) was also on yesterday’s AgriTalk program (audio replay of interview (MP3- 11:00), FarmPolicy.com transcript here) where in part, host Mike Adams asked, “What are the prospects of getting to work on this [Farm] bill any time soon?”

Rep. Peterson noted that, “Well, they’re not very good if we don’t get some kind of positive response out of the leadership. What could happen, I think, is a reenactment of this year, where we muddle along, nothing gets done, we come up to September, we blow past the expiration of the commodity title.

“The dairy was…we had kept that on a calendar year. They kept it on a calendar year again, so that doesn’t expire until December 31st, so we could just idle along and then get to December and then everybody get all freaked out because milk is going to go to seven dollars, and we could end up with another year extension after that.”

Rep. Peterson added that, “Well, you know, Frank and I are ready to go to work and we’re ready to get this done. The committee is ready to get this done. We did our work last year. We did everything everybody asked us to do. We’re the only committee that did. And what really sticks in my craw is that we’re the ones that actually did the right thing and we got penalized, and the people that didn’t do their work got rewarded…”

With respect to Sen. Thad Cochran (R., Miss.) becoming the Ranking Member of the Senate Ag. Comm., Rep. Peterson stated that, “I went over last Friday afternoon and had a nice visit with Senator Cochran. I’ve known him for a while. He’s a true gentleman and statesman, and I look forward to working with him. But I think for sure the Southern agricultural interests will come out better in whatever ends up happening in the Senate.”

Also, Ken Anderson reported yesterday at Brownfield that, “For his part, [Iowa GOP Sen. Chuck Grassley] doesn’t see a need to make big changes to the farm bill passed by the Senate in 2012.

“‘The majority of the committee and the majority of the Senate was very strongly in support of what passed the Senate—and I would hope that it would stay the same.’

“But Grassley says what happens over the next couple months in the debate on federal spending could have a major impact on the next farm bill.”

An update posted recently at Niagara Frontier Publications (Grand Island, NY) Online noted that, “On his first full week on the job, [new GOP Ag. Com. Member] Chris Collins, NY-27, met with approximately 40 local farmers Monday afternoon to talk about what they want to see as part of a new farm bill.”

And, Elizabeth Dohms reported this week at The Chippewa Herald (Wis.) Online that, “[Cadott dairy farmer George Polzin] whose family farm comprises about 600 acres of crop land and 100 registered red and white Holstein cows, said agricultural farming is taken for granted.

“‘We in animal agriculture cannot be nonprofit public servants because it doesn’t work that way,’ he said.

“Polzin and other farmers were hopeful that Congress would pass a previous bill that was approved by the Senate and the House Agriculture Committee last year that included dairy reforms.”

The article noted that, “‘There is more uncertainty in the dairy industry than there has been probably ever been in my 30 years I’ve been on the farm,’ Polzin said.”

An update this week at the Addison County Independent (Vt.) Online reported that, “Included in the 2008 Farm Bill programs is the Milk Income Loss Contract (MILC), which subsidizes dairy farmers when milk prices drop below certain levels. Sen. Patrick Leahy, D-Vt., managed to get the critical safety net extended until September as an emergency fix…[T]he deal to extend MILC was made at the expense of over $100 million in food assistance programs. The budget for the Supplemental Nutrition Assistance Program (SNAP-Ed), which provides nutritional education to families on food stamps, was slashed by a third.”

The article added that, “For Addison County dairy farmers, who struggled throughout the year as national milk prices sagged and grain prices shot sky-high throughout the summer’s long drought out West, the measures kept critical safety nets in place without offering any real solutions.”

Jeff Frantz reported this week at PennLive (Harrisburg, Pa.) Online that, “The short-term [Farm Bill] fix means Pennsylvania farmers aren’t getting what they — like most Americans — say they want from Congress: stability and predictability. And it’s costing them money.

“For dairy farmers, the extension meant another eight months of Milk Insurance Loss Contracts. That program is designed to protect dairy farmers, but [Harold Shaulis, a dairy farmer from Somerset] said it pays farmers 40-43 cents on the dollar when milk prices plummet, while obscuring the true nature of the market. Since few dairy farmers know what their actual cash flow would be without the program, Shaulis said it’s very difficult to predict future income. That makes the sort of infrastructure investments necessary to maintain or grow business very risky. Sometimes too risky.

The new farm bill would replace the MILC program with an insurance program that would guarantee an income floor, tied to the policy the farmer purchased. When milk prices are strong, there would be no need to tap the policy. When they are weak, farmers would be made whole.”

 

Budget

Paul Krawzak reported yesterday at Roll Call Online that, “The Obama administration’s fiscal 2014 budget is widely expected to arrive late on Capitol Hill, possibly not until sometime in March, primarily as a result of uncertainty created by fiscal cliff negotiations.”

 

Agricultural Economy

Juliet Eilperin reported in today’s Washington Post that, “Temperatures in the contiguous United States last year were the hottest in more than a century of record-keeping, shattering the mark set in 1998 by a wide margin, the federal government announced Tuesday.”

Meanwhile, Bloomberg writer Luzi Ann Javier reported today that, “The drought that ravaged U.S. corn and soybean crops and spurred record prices may persist, threatening a recovery in production this year that’s needed to bolster global inventories, according to forecasters.

“‘Unless there’s a sudden change to very wet conditions, it sure looks like drought is going to be a feature going into the planting season, spring at least,’ Bryce Anderson, an agricultural meteorologist at DTN, said in a phone interview from Omaha, Nebraska yesterday.”

The Bloomberg article noted that, “U.S. corn production fell 13 percent to 272.4 million metric tons in 2012-2013, the lowest since 2006-2007, according to the U.S. Department of Agriculture, which will update figures on Jan. 11. The soybean harvest fell 4 percent to 80.9 million tons, USDA data show. Global corn stockpiles will fall to 117.6 million tons by Oct. 1, or 13.6 percent of projected demand for food, ethanol and livestock feed, the lowest ratio since 1974.”

Matt Kelley reported yesterday at RadioIowa Online that, “A new federal report finds well over half the country is still in a drought, including all of Iowa and several neighboring states.

“USDA meteorologist Brad Rippey says it’s easy to forget about the drought during wintertime, because there’s no blazing heat and lots of snow, but he affirms, the exceptionally dry weather is continuing.”

And, Bloomberg writer Brian Wingfield reported yesterday that, “Barge operators on the Mississippi River say the worst drought in 80 years may put at risk gains from emergency dredging and rock removal aimed at keeping the nation’s busiest waterway open at least for this month.

“‘The only way that we could maintain a navigable channel would be releases from the Missouri River system’ if Mississippi conditions worsen, Scott Noble, a senior vice president for Ingram Barge Co., said yesterday at a meeting in southern Illinois. That option is ‘probably not very likely,’ he said later in an interview.

“Shipping company officials joined the U.S. Coast Guard, the Army Corps of Engineers and lawmakers including Senator Richard Durbin, an Illinois Democrat, yesterday in Thebes, a hamlet on the eastern bank of the Mississippi where rocks pose the greatest hazard to river traffic. Emergency dredging and excavation work will keep the river navigable for most towboats at least through this month, Corps of Engineers officials said.”

Keith Good

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